Ultimately,a car title loan will havevery little effect on your credit. Most title lenders won鈥檛 even check your credit score before approving you. Title loans are often an avenue for people with low credit to get money in emergencies. Usually,a title loan will not affect your credit either way.
People also ask
How do title loans affect your credit?
Before we get into how exactly title loans affect your credit, you need to understand how title loans work. To receive a title loan, you put the title, or ownership, of your car up as collateral. If you fail to repay the loan by the due date, then you will lose your car.
What happens if you don鈥檛 repay your title loan?
If you fail to repay the loan by the due date, then you will lose your car. Some consider title loans a bad idea due to their high APRs, but like credit cards, if used responsibly, they can be a viable solution.
Can a car title loan be repossessed?
Car title loans have a deadline, which you are expected to pay up your debt before then and collect the title of the vehicle you have used as collateral. But sometimes, things get out of hand and you find yourself in an awkward position; you鈥檙e about to lose your vehicle to repossession.
Are car title loans reported to credit bureaus?
However, car title loans are reported to credit bureaus in the case of vehicle repossession. This means that losing your car can not only be disastrous for your daily life, but can harm your credit score for years. Title loans are often an avenue for people with low credit to get money for emergencies.